This was mentioned to me earlier this week as fact, but until someone confirms this deal, the details are sketchy. If you know more, e-mail tips@valleywag.com.

The major shareholders were Calacanis and partners Brian Alvey and Gordon Gould.

Gould was with Calacanis at the Silicon Alley Reporter, a 90s dot-com news outlet. He wanted Calacanis to sell the company; Calacanis waited too long and ended up having to sell for much less; Gould lost potential millions.

Then Gould bought into Weblogs, Inc., with most of his share in Blogsmith. So when WIN sold most every asset but Blogsmith, it looked like he'd get screwed again — especially if WIN opened up the Blogsmith platform as Calacanis kept hinting. But with this sale, the man can finally pocket some money — even if it's only a mil or two. And it looks like he did get screwed — Gould's share hadn't fully vested, so he didn't make much at all from this sale. Maybe next time, dude.

Riya today launched Like.com, a photo-based shopping site that lets users click one handbag, shoe, or other accessory and find similar ones.

Remember the story behind this startup: A while back, this startup was about to sell to Google. But marketing rep Tara Hunt and outside blogger Robert Scoble wrote too much about the deal on their blogs. The coverage spooked Google, who backed away from the talks, deciding it was better off developing its own image search. Riya decided it would take over the image search world on its own.

So why launch Like? Isn't it a disappointing result for a startup with such grand aspirations?

Live does two things:

1. It may bring in a little income. On its own, not so much — it's an ugly site to surf through, so it makes an uncomfortable shopping experience — but Riya could license the technology to other shopping sites.
2. It may bring in a buyer. Riya needed a publicity boost to attract buyers — Yahoo, for example, could plug this tool into Flickr.

Like.com [By Riya]

Yep. And that's just what they bought YouTube for.

As Fred von Lohmann of the Electronic Frontier Foundation said last month, no media company wanted to buy YouTube because no media company wanted to be the test case for the inevitable round of copyright lawsuits. Everyone saw what happened to Napster in the 90s, and they knew fighting such a battle could sap their resources, and victory was not guaranteed.

But Google, bless its hubristic heart, was ready to fight. Google stood to lose a lot if an independent YouTube lost copyright cases. But now that the giant owns YouTube, it can throw its full weight behind not only fighting lawsuits, but staving them off with deals.

In other words, Google bought the lawsuits. And that may be its smartest purchase yet.

Google in bid to halt YouTube legal threat [Financial Times]
A Brief Interview with EFF's Fred von Lohmann [John Battelle's Searchblog]

I ordered a meal, but couldn't make myself eat it. The food just sort of seemed to stick in my mouth, each swallow painful.

"So what are you going to buy first?" someone asked each of us. When it came to me, I stared blankly. I couldn't think of anything I wanted.

"Who's going to pay for the check?" Steve asked. "Oh, wait. I just realized, for the first time, that it's irrelevant."

The Afterparty [Raw Thought; picture from Reddit]

Maybe they wanted the bold-name talent of founder Joe Kraus (also a founder of that dot-com bubble poster child Excite). Maybe Kraus has blackmail on someone in the Google mergers and acquisitions department. Or maybe at Google's level, with $10 billion in cash floating around, the difference between $10 mil and $50 mil isn't worth picking over.

Earlier: Google buys JotSpot [Valleywag]

The language is wilting. Time for a new batch of words.

• Not safe for work? Try "not safe for coffee shops" — NSFCS. Brought to you by Web 2.0 satire blog Supr.c.ilio.us.
• The same blogger coined Starbucking — the act of telecommuting from a café.
• Notice today's three dot-com buyouts — JotSpot, Reddit, and whatever that dinky travel site was? That's a clusterpluck.
• Classic videos about computers and the Internet, especially ones with visible VHS artifacts in the recording (like this one) are media kitsch.

The Wired News director who will oversee Reddit now that it's owned by Wired parent Condé Nast, already explained Wired's plan for the social bookmark site to Valleywag. Now Reddit cofounder Alexis Ohanian offers Reddit's take on the news coverage and the site's future.

I asked Reddit's founders how they felt about coverage on the tech blog TechCrunch, who compared Reddit to Digg (a more popular social news site), and where the company expects to go. Below is Alexis's reply, devoid of a Digg mention.

As far as I know, this was the first time we graced the pages of TechCrunch, so we're just happy for the coverage. In fact, I think Michael made some very good points about reddit's fast load time and high content-to-ad ratio. I do wish he'd mentioned our mascot, but oh well.

The team has been pretty much solidified ever since we got personalized mugs, so I believe any expansion in the near future would involve continuing to build out reddit as well as integrate technology with some existing [Condé Nast] web properties, like Style.com and Epicurious.com. We'd also like to continue building new sites — like lipstick.com — both for CN and outside clients.

Oh, and btw, we totally pwn3d [Wired's] Kourosh in Soul Caliber.

Earlier: Behind the deal, volume III: Wired buys Reddit [Valleywag]

As TechCrunch reported and Reddit announced this morning, Condé Nast bought social bookmarking site Reddit. I talked to Wired Digital general manager Kourosh Karimkhany, who will directly oversee Reddit as a Wired property.

Condé Nast first experimented with Reddit by collaborating on a small project, lipstick.com. It's a gossip site built on the same voting and bookmarking system used on Reddit. (The site is still "doing well," says Kourosh, who's not sure what will happen to it now.)

"They were a little bit skeptical of us," says Kourosh of Reddit's four-man team. "But we liked what they were doing," and Condé Nast was "pleasantly surprised" with the outcome.

The two companies started talking seriously this summer, he says. "I went to their Boston pad, we played some video games." And this month they wrapped up the buyout.

Wired Digital plans to expand Reddit, continuing the flagship Reddit.com site while "blowing out new products." He cites one deal with the Washington Post and its Slate site, made before Wired bought Reddit. Condé Nast also wants to integrate Reddit with some of its own titles.

"We want to distribute the Reddit technology widely throughout the net," says Kourosh — meaning Wired wants buyers to license the Reddit system. The company wants Reddit to "just focus on building out," which may involve adding to the current staff of four (all co-founders), who will all move from Boston to San Francisco and work at Wired's office.

Kourosh dodged one question — when I asked (twice) whether Wired had considered the more popular social news site Digg, he would only say, "Reddit was the right choice. We liked Reddit's open attitude. Came down to that."

Sounds like something went on — one could speculate that Wired got turned off by Digg's price or realized founder Kevin Rose wouldn't budge from his own plans for his site (which apparently don't include third-party licensing like Reddit's). When I asked Rose if Condé Nast had approached Digg, he declined to comment, saying his company doesn't respond to rumors.

The irrepressible John Gotts, who bought the Wiki.com domain for $3 million in August (Valleywag profile here), tells me, "This will certainly make Wiki.com more valuable and make more people aware of wikis in general." (He then spent six paragraphs bragging about the success of Wiki.com — which will end up costing just shy of $4 million — and his other properties.)

Ross Mayfield, founder of JotSpot competitor SocialText, congratulated JotSpot on his blog, saying, "It has been great competing with you." Blogger Paul Kedrosky notes to me that Ross only takes three sentences to call this buyout "another great validation" of collaborative wiki services.

So for now, the major impact of the JotSpot buyout is free airtime for its competitors.

While the price is a mystery, one blogger says any price is a great payoff for the founders' $100,000 investment. But after launching its product, the company took $5.2 million in VC funding in 2004.

We're Googlers now [JotSpot blog]

A web 2.0 acquisition is going to happen tomorrow morning in the online travel space. It's a desperation move to avoid the dot com deadpool; it's worth under $4 mil.

How much dirt should I give you? The employees are getting screwed, the per share value is next to nothing. Of course, the non-technical, MBA visionary who started the company will walk away with real money and a golden parachute.

Aw, it's always the useless business guys who cash out, innit? If you know more, e-mail tips@valleywag.com.

Five reasons this is the worst possible deal for Yahoo

1. Yahoo's current motive is to overtake Google in traffic, income, or value. AOL recently fired thousands of employees and is struggling to keep its user base. Why buy a shrinking property?
2. If Yahoo can afford AOL, it can afford Facebook, Six Apart, Technorati, and all kinds of other healthy dot-coms. Hell, I'll list them in the next post.
3. Yahoo is worth $35 billion in stock, and the company has just $3 billion in cash. AOL might be worth $10-15 billion. Even if it spends all its cash, Yahoo will still have to give a lot of stock to Time Warner.
4. Yahoo may want to replace CEO Terry Semel (pictured here, out of fashion on two levels). But they won't find one among AOL's execs — no great leader stands out at that company, unless one counts has-been Vice Chairman Ted Leonsis or loudmouth Netscape head Jason Calacanis. (And one should not count them.)
5. Clunky, cluttered, and unhip, AOL is a symbol of everything that makes Yahoo #2 and Google #1. If anything, it will hemorrhage money and lose users. Worst. Deal. Ever.

Yahoo's dilemma: Deal or no deal? [Fortune; photo by Maximum Mitch on Flickr]
Earlier: Yahoo needs to buck up and make a big deal [Valleywag]

Facebook has to sell at some point. Just as with YouTube, it means nothing that Facebook's founder pretends his company could continue independently. In fact, it's much less likely for Facebook, which has a smaller user base, tougher competitors (YouTube was king of video; Facebook is still smaller than MySpace), and fewer immediate advertising opportunities. Internet traffic tracker ComScore says Facebook's traffic actually fell by over a million visitors last month.

But Facebook is too cocky to drop down to a $1 billion offer, which is all Yahoo's still offering. Both are playing chicken now, hoping that no third party approaches the other with a sweeter deal. In the meantime, other massive social sites like YouTube and MySpace soak up the benefits of major corporate ownership: stability, cash flow, and huge leverage in future deals with other conglomerates. And Google and News Corp are basking in the halo effect of their popular purchases.

So which will cave first, Facebook or Yahoo — or will Google snatch up Facebook too?

Yahoo's Talks With Facebook Get Bogged Down [Wall Street Journal, free]

So far, the companies that Yahoo courted but Google bedded include AOL (5% stock sale to Google), MySpace ($900M advertising deal), and YouTube ($1.65B sale). The next could be Facebook, unless Google flubs its offer or Yahoo gets some balls and puts out a stronger offer.

Which, of course, analyst Jordan Rohan (Mr. "MySpace will be worth $15 billion in three years") advises against. "I would prefer they spend less than $1 billion for it," he says, ignoring Facebook founder Mark Zuckerberg's clear demand for more than $2 billion. If Yahoo wants Facebook, it needs to bring real money.

Problem is, Yahoo only has $4 billion cash on hand, says the Times, while Google has $11 billion to blow. So Yahoo's got room for just one huge deal like Facebook, which would hopefully bring back its winning style — it's only been out of fashion with advertisers for a year or two — and put it back into the race with Google.

Yahoo's Growth Being Eroded by New Rivals [NY Times]

CD-swapping site LaLa used some of its nine million bucks to buy an resurrect a dead Internet radio station, WOXY. Just when you thought a site already made obsolete by Amazon, eBay, and iTunes couldn't get any more irrelevant, ya know?

So maybe this will pit LaLa against popular customized Internet radio sites like Pandora and Last.fm. Hahahahahanope. Those services actually play the music someone wants. Because it's meant for wide broadcast ("wide" here meaning "less than the local country station"), WOXY will run crippled playlists under heinous laws for Internet radio. A CNET writer reports:

LaLa has been very careful about following the letter of the law, which includes obtaining the proper licenses and imposing certain rules on the DJs. The stations must be at least three hours long, you can only use two songs per artist, and you cannot listen to your own station (bummer). But, hey, it is free, so I'm not gonna complain too much.

"But, hey, it is free, so I'm not gonna complain." Not quite the perfect tagline.

LaLa.com revives WOXY [CNET]

GOOG is looking at Facebook at a 2.3bil price. This could be a total joke on their part, but the source is solid.

It's scary 'cause it's possible — even if the rumored price is stupid. As a commenter notes, Yahoo is reportedly looking at Facebook for a much lower price. If Google made an offer over $2 billion, and threw in autonomy to boot (as it did with YouTube), that'd beat the pants off Yahoo, who might try to fuck up the branding. Founder Mark Zuckerberg and his investors would be morons not to pick Google.

From a source inside YouTube... [Threadwatch]